Trading Plan for 12/11

If pessimism at Monday’s highs is potentially bullish… then Tuesday’s day-long test of support should only be more so. Failing an attempt to rally, or not attempting to rally at all, would be bearish.

Pattern points… (Setups and technicals)[pay]
Selling at Monday’s highs was impatient and pessimistic. A new downleg was unlikely to begin without first probing above it. Attempting a new downleg was likely to recover. I’ll go out on a limb, and proclaim that “we’ll see.” Obviously, the pattern must resolve eventually. But I will also suggest that it hasn’t yet resolved.

Tuesday’s open gapped down about 4 points to 1804.00, and the entire session ranged sideways around it. The morning’s test of 1808.00 was offset by several afternoon tests of 1801.50. That’s not a resolution.

Tuesday’s last dip overlapped 1803.00-1804.00 into the close. That was also the morning’s low. The noon hour’s entry was also overlapping it, too, and so was the afternoon bias environment’s exit. Its support has been chipped away, but not broken. That’s not a resolution.

Since buyers gained no traction for their efforts Tuesday (what efforts?), rallying Wednesday morning would require gapping up. A probe of fresh highs whose origin gaps up would suggest the probe would fail. But having chipped away at support, extending down any deeper into Friday’s range would be unlikely to recover, and more likely to resume the downleg that ended last Wednesday.

That’s a resolution.

[/pay]What’s Next… (Outlook and opportunities)[pay]
There are no econ reports of importance Wednesday. A budget deal may be getting nearer, which means rumors confirming or denying it should become more frequent. They are usually opportunities to fade, as their effects tend to be short-lived.[/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.